EC proposes financial transaction tax

If the proposal is approved it would come into effect at the start of 2014 and raise about €57 billion (£50 billion) a year.

The announcement comes at a time when Greece's progress in cutting its debts is to be assessed.

The way in which the tax would work is that a rate of 0.1 per cent would be levied on all transactions between institutions when at least one of the institutions taking part in the transaction is a member of the EU. Derivative contracts would also be taxed at a rate of 0.01 per cent.

The commission explained the tax was "to ensure that the financial sector makes a fair contribution at a time of fiscal consolidation in the member states" and that the money raised would be used as a contribution to public finances.

The president of the commission, Jose Manuel Barroso said it was "time for the financial sector to make a contribution back to society" in his annual State of the Union address in Strasbourg. He also said "the issuance of joint debt will be seen as a natural and advantageous step for all."

However, a spokesperson for the UK Treasury said it would "absolutely resist" any tax that was not introduced globally. In a statement to the BBC, he said "we would not do anything that is not in the UK's interests."

The tax would need to have full backing and approval by the UK before any move can be made by the EC to implement it.